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How Is My E-Mod or X-Mod Calculated By NCCI or WCIRB?

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How Is the E-Mod or X-Mod Calculated?

My E-Mod or X-Mod how it is calculated? X-Mod / E-Mod questions are becoming the most popular questions that I receive in person or by email. The new E-Mod rules published by NCCI have quite a few companies concerned over whether they will be paying more premiums even though there was no increase in their incident rate.

Picture of Calculator With Pen Calculating E-Mod or X-Mod NCCI
(c) 123rf.com

My last post discussed the E-Mod formula in its rawest form. The more complicated and complete formula is here. I always recommend on not delving into the minutia of the E-Mod (X-Mod) formula.

The main variables that will affect your Mod are:

  • Number of accidents – having a large number of reported accidents will increase the Mod more dramatically than any other type of occurrence. The E-Mod (X-Mod) system was built around heavily penalizing employers with a large number of accidents when compared to similar companies
  • Drop in payroll – this is a more common variable than a few years ago. The risk of accidents being spread over a smaller amount of payroll will indirectly increase the E-Mod. As with most financial situations, smaller employers pay more for the same coverage than larger employers
  • Classification Code changeNCCI and the state rating bureaus have changed a number of class codes since 2006. Some class codes are actually less expensive while others have increased somewhat.
  • Claims staffs are now smaller the reduction in size means fewer claims adjusters to handle the Workers Comp claims. Claims that are examined less tend to have higher reserves – that is the nature of the business

    Picture Hand Showing E-Mod or X-Mod Calculated
    StockUnlimited
  • Premium auditors are overworkedas with the claims departments, auditors are being asked to cover more territory and or more employers. Having a brief claims audit can lead to overcharges.
  • Upcoming NCCI Changesthere are many articles that I had written a few months ago on how the primary loss portion of the claims is going to double in 2013. Employers with E-Mods of 1.2 are going to see increases in E-mods and premiums. There are more increases for 2014 and 2015 which is going to increase the E-Mod even more if you are a higher risk employer.
  • Employers have reduced safety departments – the best way to have a lower E-Mod and pay less premiums is to prevent an accident from occurring. Due to our present economy employers have been reducing their safety departments with some completely eliminating them. Reducing the size of a safety department can end up costing an employer for up to four years.

The bottom line is to not worry about the E-Mod (X-Mod) calculation. It is more cost-effective to worry about the inputs to the formula.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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